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HomeMy WebLinkAboutUntitled T 01E © Lo9c H LB Tautges Redpath, Ltd. 1 Certified Public Accountants and Consultants f OCT ' 2001 October 10,2001 Judy Hoist Director of Finance City of Oak Park Heights 14168 Oak Park Boulevard Oak Park Heights,MN 55082 Dear Judy: Enclosed are two copies of our standard engagement letter for auditing services for the year ending December 31, 2001 for the City of Oak Park Heights,Minnesota. This engagement letter is similar to last year's except for rates which have increased an average of approximately six percent. The scope of services are as follows: • Audit the general purpose financial statements of the City of Oak Park Heights, Minnesota as of and for the year ending December 31, 2001. An"in-relation-to" opinion on the combining, individual fund and account group financial statements. The statistical section will not be subjected to the auditing procedures applied in our audit of the general purpose fmancial statements. • Preparation, copying and binding Annual Financial Report. • State Legal Compliance Audit. • Preparation of separate Management Report. We understand that the fmancial statements will be presented in accordance with financial reporting model in effect prior to that described in GASB Statement No. 34. Upon the approval of this agreement by your Council and execution,please return one copy to our office and retain the other copy for your files. If you have any questions,please don't hesitate to call. Sincerely, HLB TAUTGES REDPATH, LTD. David J. Mol, CPA DJMiclg 4810 White Bear Parkway,White Bear Lake, Minnesota 55110, USA Telephone:651 426 7000 Fax:651 426 5004 HLB Tautges Redpath,Ltd.is a member of HLB International.A world-wide organization of accounting firms and business advisers. f • H LB Tautges Redpath, Ltd. Certified Public Accountants and Consultants CLIENT COPY' October 10,2001 City of Oak Park Heights 14168 Oak Park Boulevard Oak Park Heights,MN 55082 We are pleased to confirm our understanding of the services we are to provide the City of Oak Park Heights, Minnesota for the year ending December 31, 2001. The scope of services includes the following: • We will audit the general purpose financial statements of the City of Oak Park Heights, Minnesota as of and for the year ending December 31, 2000. We understand that the fmancial statements will be presented in accordance with financial reporting model in effect prior to that described in GASB Statement No. 34. We will provide an "in-relation-to" opinion on the combining, individual fund and account group financial statements. The statistical section will not be subjected to the auditing procedures applied in our audit of the general purpose financial statements. • Preparation,copying and binding Comprehensive Annual Financial Report. • State Legal Compliance Audit. • Preparation of separate Management Report. Audit Objectives The objective of our audit is the expression of an opinion as to whether your general purpose financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the financial statements taken as a whole. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America and the standards for fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and will include tests of the accounting records of the City of Oak Park Heights, Minnesota and other procedures we consider necessary to enable us to express such an opinion. If our opinion on the financial statements is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. 4810 White Bear Parkway,White Bear Lake, Minnesota 55110, USA Telephone:651 426 7000 Fax:651 426 5004 HLB Tautges Hedpath,Ltd.is a member of NE International.A world-wide organization of accounting firms and business advisers. City of Oak Park Heights, Minnesota Contract for Auditing Services October 10,2001 Page 2 We will also provide reports (that do not include opinions) on internal control related to the financial statements and compliance with laws, regulations, and the provisions or grant agreements, noncompliance with which could have a material effect on the financial g statements as required by Government Auditing Standards. Management Responsibilities Management is responsible for establishing and maintaining internal control and for compliance with laws, regulations, contracts, and agreements. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the financial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and effective internal control over fmancial reporting, the selection and application of accounting principles, and the safeguarding of assets. Management is responsible for adjusting the fmancial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the fmancial statements taken as a whole. Audit Procedures—General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements (whether caused by errors or fraud) or illegal acts may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements, immaterial illegal acts, or illegal acts that do not have a direct effect on the financial statements. However, we will inform you of any material errors that come to our attention and any fraud that comes to our 114259.1 • j City of Oak Park Heights, Minnesota Contract for Auditing Services October 10, 2001 Page 3 attention. We will also inform you of any illegal acts that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and fmancial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit,we will also require certain written representations from you about the fmancial statements and related matters. Identifying and ensuring that the City of Oak Park Heights, Minnesota complies with laws, regulations, contracts, and agreements is the responsibility of management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the City of Oak Park Heights, Minnesota's compliance with applicable laws and regulations and the provisions of contracts and agreements. However, the objective of our audit will not be to provide an opinion on overall compliance and we will not express such an opinion. Audit Procedures—Internal Controls In planning and performing our audit, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing, and extent of our auditing procedures for the purpose of expressing our opinion on the City of Oak Park Heights, Minnesota's financial statements. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. (Tests of controls are required only if control risk is assessed below the maximum level.) Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform the governing body or audit committee of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable 114259.1 City of Oak Park Heights,Minnesota Contract for Auditing Services October 10,2001 Page 4 conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Audit Administration, Fees, and Other We understand that your employees will prepare all cash or other confirmations we request and will locate any invoices selected by us for testing. The workpapers for this engagement are the property of HLB Tautges Redpath, Ltd. and constitute confidential information. However, we may be requested to make certain workpapers available to certain regulators and grantor agencies pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of HLB Tautges Redpath, Ltd. personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to certain regulators and grantor agencies. The regulator and grantor agency may intend, or decide, to distribute the photocopies or information contained therein to others, including other governmental agencies. Our fee for these services will be at our government audit hourly rates plus out-of-pocket costs (such as report reproduction, typing, postage, travel, copies, telephone, etc.). Our hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit and are as follows: Partner $158.00 per hour Manager $120.00 per hour Supervisor $ 95.00 per hour Senior $ 80.00 per hour Semi-Senior $ 70.00 per hour Staff auditor $ 53.00 per hour Support staff $ 38.00 per hour Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed even if we have not completed our report. You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. 114259.1 City of Oak Park Heights, Minnesota Contract for Auditing Services October 10, 2001 Page 5 Government Auditing Standards requires that we provide you with a copy of our most recent quality control review report. Our 1998 peer review report accompanies this letter as Appendix A. We appreciate the opportunity to be of service to the City of Oak Park Heights, Minnesota and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter,please sign the enclosed copy and return it to us. Very truly yours, HLB TAUTGES REDPATH,LTD. PAAC71/41Z David J. Mol,CPA RESPONSE: This letter correctly sets forth the understanding of the City of Oak '•Heights, M , •-"sots: By: 1 ; °`,}� `` � By: � 6.1 ' a� Title: Acting Administrator Title: Mayor Date: October 29 , 2001 Date: October 29 , 2001 114259.1 . Member: Member: Arizona Society of Certified Li em Companies Practice Public Accountants m Section.Division of Firms. f!9■ Institute of Henry r A s � American Ins Certified Public Accountants P.C. APPENDIX A To the Shareholders HLB Tautges, Redpath, Ltd. We have reviewed the system of quality control for the accounting and auditing practice of HLB Tautges, Redpath, Ltd. (the firm) in effect for the year ended September 30, 1998. Our review was conducted in conformity with standards established by the Peer Review Board of the American Institute of Certified Public Accountants (AICPA). We tested compliance with the firm's system of quality control to the extent we considered appropriate. These tests included a review of selected accounting and auditing engagements. In performing our review, we have given consideration to the quality control standards for an accounting and auditing practice issued by the AICPA. Those standards indicate that a firm's quality control policies and procedures should be appropriately comprehensive and suitably designed in relation to the firm's size, organizational structure, operating policies, and the nature of its practice. They state that variance in an individual's performance and understanding of professional requirements or the firm's quality control policies and procedure can affect the degree of compliance with a firm's prescribed quality control policies and procedures, and therefore, the effectiveness of the system. In our opinion, the system of quality control for the accounting and auditing practice of HLB Tautges, Redpath, Ltd. in effect for the year ended September 30, 1998, has been designed in accordance with the quality control standards for an accounting and auditing practice established by the AICPA and was being complied with for the year then ended to provide the firm with reasonable assurance of conforming with professional standards in the conduct of that practice. Phoenix, Arizona April 28, 1999 Certified Public Accountants 2777 East Camelback Road Suite 325 Phoenix, Arizona 85016-4302 Telephone (602) 760-2920 Fax (602) 760-2917 4 Oak Park Heights Request for Council Action Meeting Date October 23, 2001 Agenda Item Title Approve HLB Tautges Redpathi Ltd. auditing services for December u. 2001 Time Required Agenda Placement Consent Originating Department/Requestor Finance -Judy Holst, Deputy Clerk/Finance Director Requester's Signature C-)re-( / Action Requested Approve December Q1, 2001 auditing services agreement Background/Justification (Please indicate any previous action,financial implications including budget information and recommendations). HLB Tautges Redpath, Ltd. is our auditing firm for our annual financial reports. I am recommending approval of their agreement for auditing services for December 31, 2001. S:\SHARED\Forms\COUNCIL ACTION REQUEST.doc HLL Tautges Redpath, Ltd. NOV 2 1 2000 Certified Public Accountants and Consultants October 25, 2000 Judy Holst Director of Finance City of Oak Park Heights 14168 Oak Park Boulevard Oak Park Heights, MN 55082 Dear Judy: Enclosed are two copies of our standard engagement letter for auditing services for the year ending December 31, 2000 for the City of Oak Park Heights, Minnesota. This engagement letter is similar to last year's except for rates which have increased an average of approximately six percent. This increase is the result of the current labor market. The scope of services are as follows: • Audit the general purpose financial statements of the City of Oak Park Heights, Minnesota as of and for the year ending December 31, 2000. An "in-relation-to"opinion on the combining, individual fund and account group financial statements. The statistical section will not be subjected to the auditing procedures applied in our audit of the general purpose financial statements. • Preparation, copying and binding Annual Financial Report. • State Legal Compliance Audit. • Preparation of separate Management Report. 4810 White Bear Parkway,White Bear Lake, Minnesota 55110, USA Telephone: 651 426 7000 Fax: 651 426 5004 HLB Tautges Redpath,Ltd.is a member of®International. A world-wide organization of accounting firms and business advisers. a Judy Ho1st Director of Finance/City Treasurer � Y City of Oak Park Heights, Minnesota October 25, 2000 Page 2 Upon the approval of this agreement by your Council and execution,please return one copy to our office and retain the other copy for your files. If you have any questions, please don't hesitate to call. Sincerely, HLB TAUTGES REDPATH, LTD. David J. Mol, CPA DJM/clg Enclosure HLB Tautges Redpath, Ltd. Certified Public Accountants and Consultants CLIENT COPY October 25, 2000 City of Oak Park Heights 14168 Oak Park Boulevard Oak Park Heights, MN 55082 We are pleased to confirm our understanding of the services we are to provide the City of Oak Park Heights, Minnesota for the year ending December 31, 2000. The scope of services includes the following: • We will audit the general purpose financial statements of the City of Oak Park Heights, Minnesota as of and for the year ending December 31, 2000. We will provide an "in- relation-to" opinion on the combining, individual fund and account group financial statements. The statistical section will not be subjected to the auditing procedures applied in our audit of the general purpose financial statements. • Preparation, copying and binding Comprehensive Annual Financial Report. • State Legal Compliance Audit • Preparatior,of separate Management Report. Audit Objectives The objective of our audit is the expression of an opinion as to whether the general purpose financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the general purpose financial statements taken as a whole. Our audit will be conducted in accordance with generally accepted auditing standards, the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the minimum procedures for auditors as prescribed by MS 6.65, and will include tests of the accounting records of the City of Oak Park Heights, Minnesota and other procedures we consider necessary to enable us to express such an opinion. If our opinion on the general purpose financial statements is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit, or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. 4810 White Bear Parkway,White Bear Lake, Minnesota 55110, USA Telephone: 651 426 7000 Fax:651 426 5004 HLB Tautges Redpath,Ltd.is a member of in.11 International. A world-wide organization of accounting firms and business advisers. City of Oak Park Heights, Minnesota Contract for Auditing Services October 25, 2000 Page 2 We will also provide reports (that do not include opinions) on internal control related to the financial statements and compliance with laws, regulations, and the provisions or grant agreements, noncompliance with which could have a material effect on the financial statements as required by Government Auditing Standards. Management Responsibilities The management of the City of Oak Park Heights, Minnesota is responsible for establishing and maintaining internal control and or compliance with laws, regulations, contracts and agreements. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the financial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting, the selection and application of accounting principles, and the safeguarding of assets. Management is responsible for adjusting the general purpose financial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the general purpose financial statements taken as a whole. Audit Procedures—General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. Because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. In addition, an audit is not designed to detect errors, fraud or other illegal acts that are immaterial to the general purpose financial statements. However, we will inform you of any material errors and any fraud that come to our attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by City of Oak Park Heights, Minnesota Contract for Auditing Services October 25, 2000 Page 3 audit and does not extend to matters that might arise during any later periods for which we are our au g g not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions and may include tests of the physical existence of inventories, and direct recorded in the accounts, y p y confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also request certain written representations from you about the financial statements and related matters. Identifying and ensuring that the City of Oak Park Heights, Minnesota complies with laws, ibili of the City of Oak Park Heights, regulations, contracts, and grant agreements is the responsibility y g Minnesota's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we will perform tests of the City of Oak Park Heights, Minnesota's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit will not be to provide an opinion on overall compliance with such provisions, and we will not express such an opinion. Audit Procedures—Internal Controls In planning and performing our audit for the year ended December 31, 2000, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing and extent of our auditing procedures for the purpose of expressing our opinion on the City of Oak Park Heights, Minnesota's general purpose financial statements. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform you of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the general purpose financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the general purpose financial statements. (Tests of controls are required only if control risk is assessed below the maximum level.) Our tests, if performed, will ti City of Oak Park Heights, Minnesota Contract for Auditing Services October 25, 2000 Page 4 be less in scope than would be necessary to render an opinion on the internal control and, accordingly, no opinion will be expressed. Audit Administration,Fees and Other We understand that your employees will prepare all cash or other confirmations we request and will locate any invoices selected by us for testing. The workpapers for this engagement are the property of HLB Tautges Redpath, Ltd. and constitute confidential information. However, we may be requested to make certain workpapers available to certain regulators or grantor agencies pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of HLB Tautges Redpath, Ltd. personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to regulators or grantor agencies. The regulator or grantor agency may intend, or decide, to distribute the photocopies of information contained therein to others, including other governmental agencies. Our fee for these services will be at our government audit hourly rates plus out-of-pocket costs (such as report reproduction, typing, postage, travel, copies, telephone, etc.). Our hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit and are as follows: Partner $140.00 per hour Manager $105.00 per hour Supervisor $ 90.00 per hour Senior $ 75.00 per hour Semi-Senior $ 65.00 per hour Staff auditor $ 50.00 per hour Support staff $ 32.00 per hour Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. If we elect to terminate our services for nonpayment, you will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination. Government Auditing Standards requires that we provide you with a copy of our most recent quality control review report. Our 1998 peer review report accompanies this letter as Appendix A. City of Oak Park Heights, Minnesota Contract for Auditin g Services October 25, 2000 Page 5 We appreciate the opportunity to be of service to the City of Oak Park Heights, Minnesota and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Very truly yours, HLB TAUTGES REDPATH, LTD. t David J. Mol, CPA RESPONSE: This letter correctly sets forth the understanding of the City of Oak Park Heights, Minnesota: By: \INN„\rv--..... ...„.\ By: A.(7,14 Title: Administrator Title: Mayor Date: December 5, 2000 Date: December 5, 2000 Member: Member: Arizona Society of Certified Private Companies Practice Public Accountants Henry A• Lie■ G m■ ection.Division of Firms. American Institute of Certified Public Accountants P.C. A APPENDIX A To the Shareholders HLB Tautges, Redpath, Ltd. We have reviewed the system of quality control for the accounting and auditing practice of HLB Tautges, Redpath, Ltd. (the firm) in effect for the year ended September 30, 1998. Our review was conducted in conformity with standards established by the Peer Review Board of the American Institute of Certified Public Accountants (AICPA). We tested compliance with the firm's system of quality control to the extent we considered appropriate. These tests included a review of selected accounting and auditing engagements. In performing our review, we have given consideration to the quality control standards for an accounting and auditing practice issued by the AICPA. Those standards indicate that a firm's quality control policies and procedures should be appropriately comprehensive and suitably designed in relation to the firm's size, organizational structure, operating policies, and the nature of its practice. They state that variance in an individual's performance and understanding of professional requirements or the firm's quality control policies and procedure can affect the degree of compliance with a firm's prescribed quality control policies and procedures, and therefore, the effectiveness of the system. In our opinion, the system of quality control for the accounting and auditing practice of HLB Tautges, Redpath, Ltd. in effect for the year ended September 30, 1998, has been designed in accordance with the quality control standards for an accounting and auditing practice established by the AICPA and was being complied with for the year then ended to provide the firm with reasonable assurance of conforming with professional standards in the conduct of that practice. Phoenix, Arizona April 28, 1999 Certified Public Accountants 2777 East Camelback Road Suite 325 Phoenix, Arizona 85016-4302 Telephone (602) 760-2920 Fax (602) 760-2917 44...).x..t4 H LB Tautges Redpath, Ltd.. Certified Public Accountants and Consultants ��rS v ��G October 4, 1999 City of Oak Park Heights 14168 North 57th Street Oak Park Heights,MN 55082 We are pleased to confirm our understanding of the services we are to provide the City of Oak Park Heights, Minnesota for the year ending December 31, 1999. The scope of services includes the following: • We will audit the general purpose financial statements of the City of Oak Park Heights, Minnesota as of and for the year ending December 31, 1999. We will provide an "in- relation-to" opinion on the combining, individual fund and account group financial statements. The statistical section will not be subjected to the auditing procedures applied in our audit of the general purpose financial statements. • Preparation, copying and binding Comprehensive Annual Financial Report. • State Legal Compliance Audit • Preparation of separate Management Report. Audit Objectives The objective of our audit is the expression of an opinion as to whether the general purpose financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the general purpose financial statements taken as a whole. Our audit will be conducted in accordance with generally accepted auditing standards, the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the minimum procedures for auditors as prescribed by MS 6.65, and will include tests of the accounting records of the City of Oak Park Heights, Minnesota and other procedures we consider necessary to enable us to express such an opinion. If our opinion on the general purpose financial statements is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit, or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. 4810 White Bear Parkway, White Bear Lake, Minnesota 55110, USA Telephone:651 426 7000 Fax: 651 426 5004 HLB Tautges Redpath,Ltd is a member of HLIi International. A world-wide organization of accounting firms and business advisers. City of Oak Park Heights, Minnesota Contract for Auditing Services October 4, 1999 Page 2 We will also provide reports (that do not include opinions) on internal control related to the financial statements and compliance with laws, regulations, and the provisions or grant agreements, noncompliance with which could have a material effect on the financial statements as required by Government Auditing Standards. Management Responsibilities The management of the City of Oak Park Heights, Minnesota is responsible for establishing and maintaining internal control and or compliance with laws, regulations, contracts and agreements. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the fmancial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and effective internal control over fmancial reporting, the selection and application of accounting principles, and the safeguarding of assets. Audit Procedures—General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the fmancial statements are free of material misstatement, whether caused by error or fraud. Because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. In addition, an audit is not designed to detect errors, fraud or other illegal acts that are immaterial to the general purpose financial statements. However, we will inform you of any material errors and any fraud that come to our attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. City of Oak Park Heights,Minnesota Contract for Auditing Services October 4, 1999 Page 3 Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also request certain written representations from you about the financial statements and related matters. Identifying and ensuring that the City of Oak Park Heights, Minnesota complies with laws, regulations, contracts, and grant agreements is the responsibility of the City of Oak Park Heights, Minnesota's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we will perform tests of the City of Oak Park Heights, Minnesota's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit will not be to provide an opinion on overall compliance with such provisions, and we will not express such an opinion. Audit Procedures—Internal Controls In planning and performing our audit for the year ended December 31, 1999, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing and extent of our auditing procedures for the purpose of expressing our opinion on the City of Oak Park Heights,Minnesota's general purpose financial statements. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform you of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the general purpose financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the general purpose financial statements. (Tests of controls are required only if control risk is assessed below the maximum level.) Our tests, if performed, will be less in scope than would be necessary to render an opinion on the internal control and, accordingly,no opinion will be expressed. City of Oak Park Heights,Minnesota Contract for Auditing Services October 4, 1999 Page 4 Audit Administration,Fees and Other We understand that your employees will prepare all cash or other confirmations we request and will locate any invoices selected by us for testing. The workpapers for this engagement are the property of HLB Tautges Redpath, Ltd. and constitute confidential information. However, we may be requested to make certain workpapers available to certain regulators or grantor agencies pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of HLB Tautges Redpath, Ltd. personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to regulators or grantor agencies. The regulator or grantor agency may intend, or decide, to distribute the photocopies of information contained therein to others, including other governmental agencies. Our fee for these services will be at our government audit hourly rates plus out-of-pocket costs (such as report reproduction, typing, postage, travel, copies, telephone, etc.). Our hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit and are as follows: Partner $130.00 per hour Manager $102.00 per hour Supervisor $ 85.00 per hour Senior $ 72.00 per hour Semi-Senior $ 58.00 per hour Staff auditor $ 47.00 per hour Support staff $ 31.00 per hour Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. If we elect to terminate our services for nonpayment, you will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination. Government Auditing Standards requires that we provide you with a copy of our most recent quality control review report. Our 1998 peer review report accompanies this letter as Appendix A. City of Oak Park Heights,Minnesota Contract for Auditing Services October 4, 1999 Page 5 We appreciate the opportunity to be of service to the City of Oak Park Heights, Minnesota and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter,please sign the enclosed copy and return it to us. Very truly yours, HLB TAUTGES REDPATH, LTD. David J. Mol, CPA RESPONSE: This letter correctly sets forth the understanding of the City of Oak Park Heights, Minnesota: / /1%By: Title: 7 V 01 Title: Date: � lc/5 Date: /i//11/9 l Member: Member: Arizona Society of Certified Private Companies Practice Public Accountants Henry A. Li Section.Division of Firms. American Institute of Certified Public Accountants • P•C• APPENDIX A To the Shareholders HLB Tautges, Redpath, Ltd. We have reviewed the system of quality control for the accounting and auditing practice of HLB Tautges, Redpath, Ltd. (the firm) in effect for the year ended September 30, 1998. Our review was conducted in conformity with standards established by the Peer Review Board of the American Institute of Certified Public Accountants (AICPA). We tested compliance with the firm's system of quality control to the extent we considered appropriate. These tests included a review of selected accounting and auditing engagements. In performing our review, we have given consideration to the quality control standards for an accounting and auditing practice issued by the AICPA. Those standards indicate that a firm's quality control policies and procedures should be appropriately comprehensive and suitably designed in relation to the firm's size, organizational structure, operating policies, and the nature of its practice. They state that variance in an individual's performance and understanding of professional requirements or the firm's quality control policies and procedure can affect the degree of compliance with a firm's prescribed quality control policies and procedures, and therefore,the effectiveness of the system. In our opinion, the system of quality control for the accounting and auditing practice of HLB Tautges, Redpath, Ltd. in effect for the year ended September 30, 1998, has been designed in accordance with the quality control standards for an accounting and auditing practice established by the AICPA and was being complied with for the year then ended to provide the firm with reasonable assurance of conforming with professional standards in the conduct of that practice. Ae,71'7", -4t#,•)"-- Phoenix, Arizona April 28, 1999 Certified Public Accountants 2777 East Camelback Road Suite 325 Phoenix,Arizona 85016-4302 Telephone (602) 760-2920 Fax (602) 760-2917 uT 11 LI)R Tautges Redpath, Ltd. i\\ OCT ' 5 199 Certified Public Accountants and Consultants - October 4, 1999 Judy Holst Director of Finance City of Oak Park Heights 14168 North 57th Street Oak Park Heights, MN 55082 Dear Judy: Enclosed are two copies of our standard engagement letter for auditing services for the year ending December 31, 1999 for the City of Oak Park Heights, Minnesota. This engagement letter is similar to last year's. The scope of services are as follows: • Audit the general purpose financial statements of the City of Oak Park Heights,Minnesota as of and for the year ending December 31, 1999. An"in-relation-to"opinion on the combining, individual fund and account group financial statements. The statistical section will not be subjected to the auditing procedures applied in our audit of the general purpose financial statements. • Preparation, copying and binding Annual Financial Report. • State Legal Compliance Audit. • Preparation of separate Management Report. The current labor market(particularly for accounting professionals)has required us to increase starting salaries for entry level accountants by eight percent. Also,the increased demand has created pressure to increase salaries for experienced quality staff. We are sensitive to the financial pressures faced by cities with levy limits and increased demand for city services, and therefore are limiting our hourly rate increase to four percent. 4810 White Bear Parkway,White Bear Lake, Minnesota 55110, USA Telephone:651 426 7000 Fax: 651 426 5004 HLB Tautges Redpath,Ltd.is a member of HLII International. A world-wide organization of accounting firms and business advisers. Judy Ho1st, Director of Finance/City Treasurer City of Oak Park Heights, Minnesota October 4, 1999 Page 2 Upon the approval of this agreement by your Council and execution,please return one copy to our office and retain the other copy for your files. If you have any questions,please don't hesitate to call. Sincerely, HLB TAUTGES REDPATH, LTD. David J. Mol, CPA DJM/clg Enclosure CITY OF OAK PARK HEIGHTS Memo To: Mayor & Council From: Judy Ho1st,Deputy Clerk/Finance Director Re: HBL Tautges Redpath, Ltd. Auditing Services Attached is the HBL Tautges Redpath, Ltd. agreement for the December 31, 1999 annual audit. The agreement is similar to the previous year's agreement. The hourly rates for this service will increase 4%. The interim work for the audit usually starts in October or November with the final work being completed after the first of the year. I recommend approval of HBL Tautges Redpath, Ltd. Agreement for auditing services for the year ending December 31, 1999. 411 . HLBTautges Redpath, Ltd. s l5 ( ';� 1 F). Certified Public Accountants and Consultants OCT :9-1;1 October 8, 1998 CITY OF OAK PARK HEIGHTS Judy Holst, Finance Director City of Oak Park Heights _ 14168 North 57th Street /LC /7 Stillwater, MN 55082 Dear Judy: Enclosed are two copies of our standard engagement letter fo LiCett -ending December 31, 1998 for the City of Oak Park Heights, Minnes.. This engagement letter is similar to last year's. The scope of services are as follows: • Audit the general purpose financial statements of the City of Oak Park Heights,Minnesota as of and for the year ending December 31, 1998. An"in-relation-to"opinion on the combining, individual fund and account group financial statements. The statistical section will not be subjected to the auditing procedures applied in our audit of the general purpose financial statements. • Preparation of Comprehensive Annual Financial Report. • Preparation of separate Management Report. Upon the approval of this agreement by your Council and execution,please return one copy to our office and retain the other copy for your files. If you have any questions, please don't hesitate to call. Sincerely, HLB TAUTGES REDPATH, LTD. P.".6't4771?• — David J. Mol, CPA DJM/clg Enclosure 4810 White Bear Parkway, White Bear Lake, Minnesota 55110, USA Telephone: 651 426 7000 Fax: 651 426 5004 HLB Tautges Redpath,Ltd.is a member of ®International. A world-wide organization of accounting firms and business advisers. • • • HLB Tautges Redpath, Ltd. Certified Public Accountants and Consultants October 8, 1998 City of Oak Park Heights 14168 North 57th Street Stillwater, MN 55082 We are pleased to confirm our understanding of the services we are to provide the City of Oak Park Heights, Minnesota for the year ending December 31, 1998. The scope of services includes the following: • We will audit the general purpose financial statements of the City of Oak Park Heights, Minnesota as of and for the year ending December 31, 1998. We will provide an "in- relation-to" opinion on the combining, individual fund and account group financial statements. The statistical section will not be subjected to the auditing procedures applied in our audit of the general purpose financial statements. • Preparation of Comprehensive Annual Financial Report. • Preparation of separate Management Report. The objective of our audit is the expression of an opinion as to whether the general purpose financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the general purpose financial statements taken as a whole. Our audit will be conducted in accordance with generally accepted auditing standards, the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General, and the minimum procedures for auditors as prescribed by MS 6.65, and will include tests of the accounting records of the City of Oak Park Heights, Minnesota and other procedures we consider necessary to enable us to express such an opinion. If our opinion is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit, we will not issue a report as a result of this engagement. The management of the City of Oak Park Heights, Minnesota is responsible for establishing and maintaining internal control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed in accordance with management's authorizations and recorded properly 4810 White Bear Parkway, White Bear Lake, Minnesota 55110, USA Telephone: 651 426 7000 Fax: 651 426 5004 HLB Tautges Redpath,Ltd.is a member of ®International. A world-wide organization of accounting firms and business advisers. • • City of Oak Park Heights, Minnesota Contract for Auditing Services October 8, 1998 Page 2 to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. In planning and performing our audit for the year ended December 31, 1998, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing and extent of our auditing procedures for the purpose of expressing our opinion on the City of Oak Park Heights, Minnesota's general purpose financial statements. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the general purpose financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the general purpose financial statements. (Tests of controls are required only if control risk is assessed below the maximum level.) Our tests, if performed, will be less in scope than would be necessary to render an opinion on the internal control and, accordingly, no opinion will be expressed. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform you of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record,process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. Identifying and ensuring that the City of Oak Park Heights, Minnesota complies with laws, regulations, contracts, and grant agreements is the responsibility of the City of Oak Park Heights, Minnesota's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we will perform tests of the City of Oak Park Heights, Minnesota's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit will not be to provide an opinion on overall compliance with such provisions, and we will not express such an opinion. • . City of Oak Park Heights, Minnesota Contract for Auditing Services October 8, 1998 Page 3 Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also request certain written representations from you about the financial statements and related matters. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement whether caused by error or fraud. Because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. In addition, an audit is not designed to detect errors, fraud or other illegal acts that are immaterial to the general purpose ,financial statements. However,we will inform you of any material errors and any fraud that come to our attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. Management is responsible for making all financial records and related information available to us. We understand that you will provide us with the basic information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application, but the responsibility for the financial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and related internal control structure policies and procedures,the selection and application of accounting principles, and the safeguarding of assets. Management is also responsible for identifying and ensuring that the entity complies with applicable laws and regulations. We understand that your employees will type all cash or other confirmations we request and will locate any invoices selected by us for testing. • • City of Oak Park Heights, Minnesota Contract for Auditing Services October 8, 1998 Page 4 We understand the workpapers for this engagement are the property of HLB Tautges Redpath, Ltd. and constitute confidential information. However, we may be requested to make certain workpapers available to certain regulators pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of HLB Tautges Redpath, Ltd. personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to regulators. The regulator may intend, or decide, to distribute the photocopies of information contained therein to others, including other governmental agencies. Our fee for audit services will be at our governmental audit hourly rates plus out-of-pocket costs (such as report reproduction, typing, postage, travel, copies, telephone, etc.). Our hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit and are as follows: Partner $125.00 per hour Principal $105.00 per hour Manager $97.00 per hour Supervisor $80.00 per hour Senior $67.00 per hour Semi-Senior $55.00 per hour Staff $45.00 per hour Statistical Typists and Report Processors $30.00 per hour Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. If we elect to terminate our services for nonpayment, you will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination. Government Auditing Standards requires that we provide you with a copy of our most recent quality control review report. Our 1995 peer review report accompanies this letter as Appendix A. • • City of Oak Park Heights, Minnesota Contract for Auditing Services October 8, 1998 Page 5 We appreciate the opportunity to be of service to the City of Oak Park Heights, Minnesota and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Very truly yours, HLB TAUTGES REDPATH, LTD. Ail`T,TrieofZ- David J. Mal, CPA RESPONSE: This letter correctly sets forth the understanding of the City of Oak Park Heights,Minnesota: Bye c-, \I By: 1' /4 Title: City Administrator Title: Mayor Date: October 21, 1998 Date: October 21, 1998 • • w_< :,n« _ Appendix A Member: 'i Member Artzona sodety of Certified Private Compmdes Practice Public Accountants Seo1oR Institute of f3ma Gallant American Institute of (edified Public Accountants Company;PC. To the Shareholders Tautges, Redpath & Co., Ltd. We have reviewed the system of quality control for the accounting and auditing practice of Tautges, Redpath & Co., Ltd. (the "firm") in effect for the year ended September 30, 1995. Our review was conducted in conformity with standards established by the Peer Review Board of the American Institute of Certified Public Accountants (AICPA). We tested compliance with the firm's quality control policies and procedures to the extent we considered appropriate. These tests included a review of selected accounting and auditing engagements. In performing our review, we have given consideration to the quality control standards issued by the AICPA. Those standards indicate that a firm's system of quality control should be appropriately comprehensive and suitably designed in relation to the firm's size, organizational structure, operating policies, and the nature of its practice. They state that variance in individual performance can affect the degree of compliance with a firm's quality control system and, therefore, recognize that there may not be adherence to all policies and procedures in every case. In our opinion, the system of quality control for the accounting and auditing practice of Tautges,Redpath & Co., Ltd. in effect for the year ended September 30, 1995, met the objectives of quality control standards established by the AICPA and was being complied with during the year then ended to provide the firm with reasonable assurance of conforming with professional standards in the conduct of that practice. Tautges, Redpath & Co., Ltd. is a member of the private companies practice section of the AICPA Division for CPA Firms (the "section") and has agreed to comply with the membership requirements of the section. In connection with our review, we tested the firm's compliance with those requirements to the extent we considered appropriate. In our opinion, the firm was in conformity with the membership requirements of the section during the year ended September 30, 1995 in all material respects. + IC? Phoenix, Arizona February 1, 1996 Certified Public Accountants 3333 North Seventh Avenue P.O.Box 34350 Phoenix,Arizona 85067-4350 Telephone(602)263-8810 Fax(602)285-1750 N • ENCLOSURE 7 HLBTautges Redpath, Ltd_ L5 y? (5 Certified Public Accountants and Consultants !i OCT - 9 1998 October 8, 1998 OAK PARK OF Judy Holst, Finance Director City of Oak Park Heights 14168 North 57th Street Stillwater, MN 55082 Dear Judy: Enclosed are two copies of our standard engagement letter for auditing services for the year ending December 31, 1998 for the City of Oak Park Heights, Minnesota. This engagement letter is similar to last year's. The scope of services are as follows: • Audit the general purpose financial statements of the City of Oak Park Heights, Minnesota • as of and for the year ending December 31, 1998. An"in-relation-to"opinion on the combining, individual fund and account group financial statements. The statistical section will not be subjected to the auditing procedures applied in our audit of the general purpose financial statements. • Preparation of Comprehensive Annual Financial Report. • Preparation of separate Management Report. Upon the approval of this agreement by your Council and execution,please return one copy to our office and retain the other copy for your files. If you have any questions,please don't hesitate to call. Sincerely, HLB TAUTGES REDPATH, LTD. PAez-7114f-- David J. Mol, CPA DJM/clg • Enclosure 4810 White Bear Parkway, White Bear Lake, Minnesota 55110, USA Telephone: 651 426 7000 Fax: 651 426 5004 HLB Tautges Redpath,Ltd.is a member of ®International A world-wide organization of accounting firms and business advisers. • • HLB Tautges Red path, L g p Ltd. • Certified Public Accountants and Consultants October 8, 1998 City of Oak Park Heights 14168 North 57th Street Stillwater, MN 55082 We are pleased to confirm our understanding of the services we are to provide the City of Oak Park Heights, Minnesota for the year ending December 31, 1998. The scope of services includes the following: • We will audit the general purpose financial statements of the City of Oak Park Heights, Minnesota as of and for the year ending December 31, 1998. We will provide an "in- relation-to" opinion on the combining, individual fund and account group financial statements. The statistical section will not be subjected to the auditing procedures applied • in our audit of the general purpose financial statements. • Preparation of Comprehensive Annual Financial Report. • Preparation of separate Management Report. The objective of our audit is the expression of an opinion as to whether the general purpose financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the general purpose financial statements taken as a whole. Our audit will be conducted in accordance with generally accepted auditing standards, the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General, and the minimum procedures for auditors as prescribed by MS 6.65, and will include tests of the accounting records of the City of Oak Park Heights, Minnesota and other procedures we consider necessary to enable us to express such an opinion. If our opinion is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit, we will not issue a report as a result of this engagement. The management of the City of Oak Park Heights, Minnesota is responsible for establishing and maintaining internal control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, • assurance that assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed in accordance with management's authorizations and recorded properly 4810 White Bear Parkway, White Bear Lake, Minnesota 55110, USA Telephone: 651 426 7000 Fax: 651 426 5004 HLB Tautges Redpath,Ltd.is a member of IN International. A world-wide organization of accounting firms and business advisers. • • City of Oak Park Heights, Minnesota Contract for Auditing Services October 8, 1998 1111 Page 2 to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. In planning and performing our audit for the year ended December 31, 1998, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing and extent of our auditing procedures for the purpose of expressing our opinion on the City of Oak Park Heights, Minnesota's general purpose financial statements. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the general purpose financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the general purpose financial statements. (Tests of controls are required only if control risk is assessed below the maximum level.) Our tests, if performed, will be less in scope than would be necessary to render an opinion on the internal control and, accordingly,no opinion will be expressed. • An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform you of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. Identifying and ensuring that the City of Oak Park Heights, Minnesota complies with laws, regulations, contracts, and grant agreements is the responsibility of the City of Oak Park Heights, Minnesota's management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we will perform tests of the City of Oak Park Heights, Minnesota's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit will not be to provide an opinion on overall compliance with such provisions, and we will not express such an opinion. • • • City of Oak Park Heights, Minnesota Contract for Auditing Services October 8, 1998 Page 3 • Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also request certain written representations from you about the financial statements and related matters. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement whether caused by error or fraud. Because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. In addition, an audit is not designed to detect errors, fraud or other illegal acts that are immaterial to the general purpose financial statements. However, we will inform you of any material errors and any fraud that come to our attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. Management is responsible for making all financial records and related information available to us. We understand that you will provide us with the basic information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application,but the responsibility for the financial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and related internal control structure policies and procedures, the selection and application of accounting principles, and the safeguarding of assets. Management is also responsible for identifying and ensuring that the entity complies with applicable laws and regulations. We understand that your employees will type all cash or other confirmations we request and will locate any invoices selected by us for testing. • 411 City of Oak Park Heights, Minnesota Contract for Auditing Services October 8, 1998 • Page 4 We understand the workpapers for this engagement are the property of HLB Tautges Redpath, Ltd. and constitute confidential information. However, we may be requested to make certain workpapers available to certain regulators pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of HLB Tautges Redpath, Ltd. personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to regulators. The regulator may intend, or decide, to distribute the photocopies of information contained therein to others, including other governmental agencies. Our fee for audit services will be at our governmental audit hourly rates plus out-of-pocket costs (such as report reproduction, typing, postage, travel, copies, telephone, etc.). Our hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit and are as follows: Partner $125.00 per hour Principal $105.00 per hour Manager $97.00 per hour Supervisor $80.00 per hour • Senior $67.00 per hour Semi-Senior $55.00 per hour Staff $45.00 per hour Statistical Typists and Report Processors $30.00 per hour Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. If we elect to terminate our services for nonpayment, you will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination. Government Auditing Standards requires that we provide you with a copy of our most recent quality control review report. Our 1995 peer review report accompanies this letter as Appendix A. • r • City of Oak Park Heights,Minnesota Contract for Auditin g Services October 8, 1998 Page 5 We appreciate the opportunity to be of service to the City of Oak Park Heights, Minnesota and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Very truly yours, HLB TAUTGES REDPATH, LTD. David J. Mol, CPA RESPONSE: This letter correctly sets forth the understanding of the City of Oak Park Heights, Minnesota: By: By: • Title: Title: Date: Date: • V{ • way Appendix A • ; Member t. r. - .:. Member Arizona Sudety of Certified Private tbmpankt Practice Public Accountants �{ Gallant Division of Flans. 411 Amtrkln hu7lprte of Co 'PC• C[rulicd PubOt ACCOUntaMs To the Shareholders Tautges, Redpath & Co., Ltd. We have reviewed the system of quality control for the accounting and auditing practice of Tautges, g , Redpath & Co., Ltd. (the "firm") in effect for the year ended September 30, 1995. Our review was conducted in conformity with standards established by the Peer Review Board of the American Institute of Certified Public Accountants (AICPA). We tested compliance with the firm's quality control policies and procedures to the extent we considered appropriate. These tests included a review of selected accounting and auditing engagements. In performing our review, we have given consideration to the quality control standards issued by the AICPA. Those standards indicate that a firm's system of quality control should be appropriately comprehensive and suitably designed in relation to the firm's size, organizational structure, operating • policies, and the nature of its practice. They state that variance in individual performance can affect the degree of compliance with a firm's quality control system and, therefore, recognize that there may not be adherence to all policies and procedures in every case. In our opinion, the system of quality control for the accounting and auditing practice of Tautges, Redpath & Co., Ltd. in effect for the year ended September 30, 1995, met the objectives of quality control standards established by the AICPA and was being complied with during the year then ended to provide the firm with reasonable assurance of conforming with professional standards in the conduct of that practice. Tautges, Redpath & Co., Ltd. is a member of the private companies practice section of the AICPA Division for CPA Firms (the "section") and has agreed to comply with the membership requirements of the section. In connection with our review, we tested the firm's compliance with those requirements to the extent we considered appropriate. In our opinion, the firm was in conformity with the membership requirements of the section during the year ended September 30, 1995 in all material respects. C Phoenix, Arizona February 1, 1996 • Certified Public Accountants 3333 North Seventh Avenue P.O.Box 34350 Phoenix,Arizona 85067-4350 Telephone(602)263-8810 Fax(602)285-1750